TAILIEUCHUNG - Lecture Investment analysis & portfolio management - Chapter 25

The expectation can now be employed to evaluate the expected return on an asset and a portfolio. This is achieved by introducing the idea of states of the world. A state of the world summarizes all the information that is relevant for the future return of an asset, so the set of states describes all the possible different future financial environments that may arise. Of course, only one of these states will actually be realized. These states of the world are the analysts way of thinking about, and modelling, what generates the randomness in asset returns. | Investment Analysis and Portfolio management Lecture: 25 Course Code: MBF702 Outline RECAP Expected returns Population variance Population covariance Choosing an investment portfolio Expected return The expectation can now be employed to evaluate the expected return on an asset and a portfolio. This is achieved by introducing the idea of states of the world. A state of the world summarizes all the information that is relevant for the future return of an asset, so the set of states describes all the possible different future financial environments that may arise. Of course, only one of these states will actually be realized. These states of the world are the analysts way of thinking about, and modelling, what generates the randomness in asset returns. Let there be M states of the world. If the return on an asset in state j is rj and the probability of state j occurring is πj. then the expected return on asset i is Example The temperature next year may be hot, warm or cold. The .

• Tài chính doanh nghiệp
• Investment analysis
• Portfolio management
• Investment management
• Investment theory
• Investment environment
• Investment analysis
• Investment companies
• Time value of money
• Characteristics of investment
• Investment portfolio management
• Investment analysis & portfolio management
• Investment background
• Developments in investment theory
• Management of common stocks